(1888PressRelease)
December 05, 2007 - Despite P&I clubs advertising their lowest premium increases for seven years, hopes of a flexible renewal were dispelled as the clubs successfully collected 96% of their target at the 2007/8 renewals. According to Aon PLF’s renewal update published today, while it appeared that there was no need for clubs to press the panic button by hiking premiums to meet future solvency requirements, significantly higher pool claims in 2006 meant that clubs held their ground in a protracted and fiercely negotiated renewal.
Highlights of the 2007/8 renewals comprise:
* an overall market premium increase of 6.48%, in comparison to the advertised target of 6.73%. This figure allows for changes in terms and conditions, often increased deductibles for a cut in premium;
* considering net premium alone, an increase of 4.48% represented an underwriter discount of 33% on the weighted market requirement of 6.73% Compared to the 46% discount generated at last year's renewal, this is a postmortem indicator of the widespread underwriting inflexibility witnessed during the 2007 renewal;
* higher pool claims in 2006, costing US$182 million after just 9 months. This even surpassed the US$144 million of pool claims for the entire policy year of the ‘annus horribilis’ of 2004, thus turning a benign underwriting approach into a sternly disciplined one;
* the last minute introduction of a limit on passenger liability led to the passenger sector paying a 70% increase in their reinsurance tariff;
* changes in the Group Reinsurance Programme, including:
o individual club retention raised to US$7 million;
o new US$1 billion overspill layer providing a total of US$3 billion of reinsurance protection.
Stephen Hawke, executive director of Aon Marine and chairman of Aon PLF, said: “The 2007 renewal will be remembered as being slow to deliver, with owners and their brokers returning time and again to underwriters who were bound by the shackles of losses. The key question, as always, is to what extent was underwriting discipline maintained. Ultimately, the negotiations proved arduous as underwriters stuck to their guns and achieved their target.
“Also notable was the last minute introduction of a limit on passenger liability and, to insert a vengeful knife into an unsuspecting innocent, the mugging of the passenger sector into paying a 70% increase in their reinsurance tariff. We have spoken at length about the unfairness of this process and the incredible lateness of the publication of the reinsurance increases. Many owners in the passenger sector had found themselves having agreed their renewal terms, subject to reinsurance tariff, to find that the modest increase they had accepted was dwarfed by a reinsurance cost advised only three weeks before renewal.”high value home insurance
Aon UK is ranked by A.M. Best as the number one global insurance brokerage based on brokerage revenues and voted best insurance intermediary, offering classic car insurance, high value home insurance, entertainment and media liability insurance and construction insurance.
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